Interest Claims Must Be Based On Contractual Agreement, Not Just Invoice Terms: NCLT Kolkata
The NCLT Kolkata Divison Bench, comprising Bidisha Banerjee, Member (Judicial) and D. Arvind, Member (Technical) has held that interest cannot be clubbed along with the debt in the absence of an agreement or clause in the purchase order. The Tribunal further observed that TDS deduction on the interest payable is not an acknowledgement of liability. Brief Facts: Sudarshan Paper...
The NCLT Kolkata Divison Bench, comprising Bidisha Banerjee, Member (Judicial) and D. Arvind, Member (Technical) has held that interest cannot be clubbed along with the debt in the absence of an agreement or clause in the purchase order. The Tribunal further observed that TDS deduction on the interest payable is not an acknowledgement of liability.
Brief Facts:
Sudarshan Paper & Board Private Limited, the Applicant (the Operational Creditor) filed a petition under Section 9 of the Insolvency and Bankruptcy Code (IBC) seeking initiation of Corporate Insolvency Resolution Process (CIRP) against Verges Properties LLP (the Corporate Debtor).
The Applicant claimed that the Corporate Debtor defaulted in payment for goods supplied. The principal amount due was Rs. 91,49,171 with interest at 18% p.a. totalling Rs. 10,25,237, aggregating to Rs. 1,01,74,408.
Observations:
The NCLT observed that since there was no contractual agreement or clause in the purchase order for interest payments, the interest cannot be clubbed along with the debt.
The Tribunal placed reliance on Jyothi Limited v. Boving Fouress Limited and Steel India v. Theme Developers Pvt. Ltd. [(2020) SCC Online Kar 832] to hold that “interest cannot be awarded merely on the basis of a provision in the invoice.”
The Tribunal also observed that the payment of TDS on interest does not constitute an acknowledgement of the debt, referring to the Judgments in P.M. Cold Storage Pvt. Ltd. vs. Goouksheer Farn Fresh Pvt. Ltd. [(2022) ibclaw.in 705 NCLAT and R S Infra v. R P Infraventure Pvt. Ltd. [(2023) ibclaw.in 793 NCLAT.
The Tribunal noted that the claim of Rs. 91,49,171 was below the threshold limit of Rs. 1 crore for initiating CIRP under IBC.
Thus, the petition was dismissed.
Case Title: Sudarshan Paper & Board Private Limited vs Verges Properties LLP
Case Number: Company Petition (IB) Nom 54 of 2024
Date of Pronouncement: 02.09.2024